De Novo Bank Exit

25 Pages Posted: 24 Apr 2002

See all articles by Robert DeYoung

Robert DeYoung

University of Kansas School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: January 2002


Newly chartered banks provide an additional credit source for small businesses, but the staying power of new banks can be weak. A multi-state exit model is estimated for U.S. commercial banks chartered between 1980 and 1985, and for a benchmark sample of small established banks. The determinants of failure are similar for both samples, but new bank failure is more sensitive to adverse environmental conditions. The timing of new bank exit-by-failure follows a life-cycle pattern, but the timing of new bank exit-by- acquisition does not. There is mixed evidence on the effectiveness of regulations aimed at reducing new bank fragility.

Keywords: De novo banks, Market entry, Market exit

JEL Classification: G2, L1

Suggested Citation

DeYoung, Robert, De Novo Bank Exit (January 2002). Available at SSRN: or

Robert DeYoung (Contact Author)

University of Kansas School of Business ( email )

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